For profit drug and medical supply companies are geared to maximize profits

This topic is not a new one and is one I first wrote of several years ago. The concern is the number of for-profit companies who make drugs and medical supplies are not geared toward fighting pandemic or new bacterial strains that keep cropping up. They are geared toward profit. What do I mean by this?

Think of all of the television commercials about new prescription drugs. It will not be hard as there is a growing number with new names that make you ask, now what does this do? Quite simply, a drug company makes more money creating a maintenance drug you take every day for the rest of your life than they do making cures for major diseases.

It is not unusual for the company to codify a new illness which is neatly packaged with this new pill. Or, the new pill may be a supplement to an existing drug to make it better or address the side effects. Did you know there is an anti-constipation drug that is sold to help alleviate the constipation caused by opioid painkillers? Please note this is not intended to slight anyone who is gaining benefit from one of these drugs.

Making a drug that will cure something, simply has a low or negative ROI. One reason is the company would look poor if they charge to high a price for a cure. This is where the CDC and NIH must garner funding to pay for the development of drugs before the pandemic catches fire. The other risk is the new bacterial strains that may develop beyond our ability to fight the strain. This is where I first learned of the funding deficiency for massive exposure problems.

The same can be said of medical equipment. The New York Times has a good piece on the recent history of ventilator production. Agreements have been made then voided by acquisitive companies. These acquisitions were either to protect a higher priced ventilator or a market share. So, there were a number of false starts. What is frustrating is how easily contracts can be voided after an acquisition. This is horribly unfair to the buyer of the service or product, especially when the contract could help many.

There are a couple of larger points to be made. This is a great example of where there needs to be a blend of financial responsibility on investment for the greater good. This is not new. Our country has a history of a blend of corporate, venture capital, private and government investment. This is a key theme of Pulitzer Prize winning author Thomas Friedman’s book “That Used to be Us: How America fell behind in the world it created and how it can come back.”

Per another economic advisor, David Smick (“The World is Curved”) who advised Republican and Democrat presidents, this blend of capital investment need not occur on every investment or in some set order. Sometimes government funding leads and sometimes it may trail. The point is we have way to many either/ or arguments when the right answer is a blend of both or multiple. This is known as the “tyranny of the or.” Our history is built on the blend of capital investment, especially for large infrastructure projects.

So, greater good investments need to be evaluated as soon as possible. When the risk is identified, that is when the spend is needed, if not before given what the challenge is. Not having a COVID-19 vaccine early on is one thing that should have been addressed a few months ago given the development time. Not having enough ventilators is something that should have been addressed well before given their need. Leaving certain things to solely a for-profit lens will mean that some needed investments may not get made or not made soon enough.

Big Issue #3 – Investing in our Infrastructure

As a very positive sign, the President-elect has emphasized the need to reinvest in our infrastructure which is in need of repair. This is consistent with the plans that his opponent had envisioned and with policies that the current President has pleaded with Congress to do. It should be noted that this bipartisan desire echoes testimony by the leaders of the US Chamber of Commerce and Labor Unions who beseeched Congress to invest more in our infrastructure, and is reinforced by former Director of Transportation Ray LaHood and former PA Governor Ed Rendell.

These investments pay huge dividends beyond the repair, upgrade or rebuilding of our deteriorated assets of roads, highway bridges, railway bridges and lines, power grids, airports, cabling, etc. These investments create jobs. This is a key reason for Labor Union leaders backing the investment.

This is how we used to invest in our country, with government investment partnering with private investment to do things private investors could not do alone or where the ROI was insufficient for one entity. This history is well captured in a book by Thomas Friedman and Michael Mandelbaum called “That Used to be Us: How America fell behind in the World it Created and How it can come back.” A new book by Jacob Hacker and Paul Pierson called “American Amnesia: How the War on Government led us to forget what made America Prosper” echoes this theme. We have forgotten what made us great.

Yet, we should not lose sight of the reluctance of Congress to part with the money because of our debt. Former Speaker of the House John Boehner greased the skids by getting some Highway Trust funding before he retired at the end of October 2015, but that is not near enough. An economist whose name escapes me said in an interview, borrowing to invest in an asset is different from borrowing to pay for operations and with interest rates so low, we are letting the ideal time pass to do this.

We should be concerned with our debt, but like corporations, while cutting in some areas are needed, we need to invest in our deteriorated assets. This is an area where some obvious funding could be created and aligned through an increase to our comparatively low gas tax. By increasing the federal gas tax by 35 cents per gallon, per the nonpartisan The Concord Coalition, it would raise $469 billion in revenue over ten years. Plus, it would provide further incentive to purchase better miles per gallon vehicles, which will help the environment.

Investing in our infrastructure is needed and we should begin discussions early in the term of our next President. It is long overdue and will get even more people back to work, especially in areas where underemployment is higher.

America is one big pothole – stupid is as stupid does

In January, 2014, I wrote the blog “America is one big pothole” after seeing former Pennsylvania Governor Ed Rendell and former Secretary of Transportation Ray LaHood, on PBS Newshour. They have joined together for a bipartisan effort to promote much needed investment in our crumbling infrastructure – roads, bridges, railways, ports, etc. and have been in front of Congress to discuss these needs. Fifteen months later, not much has been done about the growing problems, and at the end of this month, our stop-gap funding of the Highway Trust Fund will expire one more time.

The Amtrak accident has caused people to recognize the need, but to be honest politicians do not need anymore wake-up calls. They are fully informed of the problems, but choose not to do anything about it. Their lack of stewardship is not a surprise, but in this case, people have died and will die from their failure to act. The interesting sidebar to this is any investment in infrastructure will create jobs and, as you may recall, that was supposed to be the number one mission of this and previous Congresses. These jobs will dwarf the jobs that could be created with a Keystone Pipeline, for example, and certainly deserve more attention than many of the items discussed in the chamber of Congress.

As reported on a repeat episode on “60 Minutes” last night, this is one issue that the leaders of the US Chamber of Commerce and AFL-CIO labor union agree on. Both were in front of Congress last fall to plead with them to invest in our crumbling infrastructure. Yet, the leaders of these Congressional Committees refused to be interviewed and will not act. And, fifteen months after the following post and six months following these pleas by the US Chamber and AFL-CIO leaders, not much has happened.

The Speaker of the House has reacted with criticism over linking the Amtrak train derailment with a lack infrastructure investing. He even stated the question as “stupid.” I recognize, as do many, that this accident is likely due to excessive speed. But, one of the investments would have added a breaking system that may have kicked in. One thing is for certain, a question about failing to invest in our infrastructure is not “stupid.” What is “stupid” is failing to act when the information to do so is so compelling and business and labor are pleading for action.

Just a quick example from the “60 Minutes” episode re-aired last night. A key railway bridge has 500 trains per day crossing it, the most heavily used railway bridge in the western hemisphere. This bridge is on the most traveled rail line in the country from Boston to New York to Philadelphia. If this bridge goes, it will not be an accident. It will be an accident waiting to happen that could be prevented.

There are other arguments noted in the attached post. Please join with me and write your Congressional representatives and ask them to act. In fact, we should tell them to act as their lack of stewardship is beyond poor. Using the Speaker’s word, their failure is “stupid” and we will be the ones who pay for their stupidity.

https://musingsofanoldfart.wordpress.com/2014/01/10/america-is-one-big-pothole/